Reckitt buys Adams cough treatments

By David Jones

LONDON (Reuters) - Britain's Reckitt Benckiser Plc (RB.L: Quote, Profile, Research, Stock Buzz) said on Monday it had agreed to buy U.S. drugs group Adams ARXT.O for $60 a share in cash, or $2.3 billion in total, to mark its entry into the U.S. healthcare market.

Reckitt, the world's largest household goods maker with products such as Cillit Bang cleaner and Lysol disinfectants, has been expanding its healthcare side with last year's purchase of Boots' Nurofen pain killers and Strepsil throat lozenges.

Adams Respiratory Therapeutics Inc is a NASDAQ listed specialty pharmaceutical group headquartered in Chester, New Jersey, and markets two non-prescription or over the counter (OTC) cough treatments, Mucinex and Delsym, in the U.S.

"It will provide Reckitt Benckiser an entry into healthcare in the USA, the world's largest OTC market," said Reckitt's Chief Executive Officer Bart Becht said in a statement.

He expects the deal to enhance earnings immediately, excluding a $60 million one-off restructuring charge, while he see substantial cost synergies from integrating Adams.

After these cost savings, the operating margins on the Adams business are expected to be similar to Reckitt's existing consumer healthcare business, the group said.

Adams sales have grown to $332 million in the year to June 2007 from $14 million some four year before. Income before income taxes for the year ending June 2007 was $48 million.

Mucinex is the U.S. market leader in adult expectorants and accounts for most of Adams' sales, and Reckitt says it will become a rapidly growing top brand in its healthcare portfolio.